Summaries of health policy coverage from major news organizations

HMO OVERSIGHT: Bill Would Give New Watchdog ‘Real Teeth’

Doctors and hospitals are pushing lawmakers to approve a bill that would give the newly created Department of Managed Care broad investigative, auditing and punitive powers against health plans that repeatedly engage in unfair business practices, the Sacramento Business Journal reports. AB 1455, introduced by Assemblyman Jack Scott (D-Altadena), would allow patients and medical providers to petition the department to conduct investigations of HMOs that act unfairly in business matters, such as failing to pay claims promptly. Under the bill, the department director would look into allegations "as he deems necessary," hold a hearing or audit and subpoena witnesses and documents related to the charges. The director then would fine violating health plans and schedule annual audits to ensure that the companies stop committing unfair acts. In addition, the new department would direct health plans to pay 70% of each new claim submitted by providers or 100% of the negotiated contract within 10 days of receipt.

A 'One-Sided' Measure? The proposed legislation was prompted by a Catholic Healthcare West lawsuit that is seeking $50 million in unpaid claims from Blue Cross for the past four years. According to CHW, one-quarter of all claims over a 16-month period were "improperly delayed, denied or underpaid." Noting that the "unfair business practices described in the bill are directly out of the CHW suit," California Healthcare Association lobbyist Mike Mattoch said, "This is really the last shot we have at reining in this kind of conduct." But Bobby Pena of the California Association of Health Plans said the measure is "very one-sided" and "assumes that all hospital billing is accurate and all health plans want to do is delay and deny care." Blue Cross lobbyist Bob Scarlett added, "We pay some 60 million claims a year. Do we screw a few up? No doubt." But, he said, the problem can be solved without lawsuits or legislation. Pena said, "We are seeing a variety of tactics being laid out, including lawsuits, hospitals and medical groups running to reporters, and now, legislation." He added, "It's almost as if people have abandoned the notion of trying to get together to hammer these things out" (Robertson, 6/26).

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